Bank on that in 2022!
Some would say that 2020/2021 were simpler years for making financial decisions. Buyers and refinancers took advantage of record-low interest rates, property values and home equity skyrocketed, and, before tougher lending rules were introduced, scores of first home buyers were getting on the ladder with government support schemes.
Today, we look at what the market is showing us for 2022. There’s new support on the horizon for first home buyers, and many options for homeowners looking to use their equity.
New year, new rates
Fixed rates have begun to increase since the historic lows we saw in 2021. Although the Reserve Bank hasn’t budged yet, many analysts are picking the official cash rate to rise by August this year. If you have a fixed rate coming up for renewal, let’s talk about your plans and discuss your options.
More support for first home buyers
From July, the First Home Super Saver Scheme will allow eligible first home buyers to withdraw up to $50K from their voluntary super contributions for a first home deposit. The Real Estate Institute of Australia is also advocating to increase the number of places in the First Home Loan Deposit Scheme – which allows first home buyers to buy with just a five percent deposit and pay no Lenders Mortgage Insurance.
To find out about other types of first home buyer support, get in touch.
Leveraging home equity
Soaring property prices have helped homeowners build a lot of equity, fast.
However, if house values drop this year, as predicted by some market experts, your equity could take a hit and restrict financial opportunities. This raises the question – when is the right time to use equity and what should you do with it?
The answer depends on your current financial situation and long-term goals. To understand exactly how much equity you could access, you’ll need to organise a property valuation (let me know if you’d like a hand with this).
Remember, using equity right now to renovate or invest could provide attractive future returns, but you’ll need to factor in affordability when making higher repayments at higher rates in years to come.
Equity can be used for many purposes:
- Renovate your home to add value
- Purchase an investment property or a business
- Refinance to a lower rate mortgage and pay it off faster
- Release a parental guarantor from your loan
- Consolidate multiple high interest debts into a single lower interest loan
- Pay for lifestyle expenses
If you’re thinking about buying an investment property, it’s important to get the right advice. Let me know if you’d like to speak with an expert and I can put you in touch with one of the fantastic Financial Advisers and Investment Property Specialists I work with.
Own your finances with debt consolidation
Before the year gets away, consider consolidating any additional debt you’ve built up recently.
Interest rates charged on credit cards, personal loans and vehicle loans are usually much higher than home loans and can create financial stress if not managed correctly.
Consolidating debts into a single loan could free up your cash for other expenses, make repayments simpler and help you have a more relaxing 2022.
If you have several high-interest debts, we could apply for a lower-rate personal loan to repay the money you owe. Another option may be to use equity in your property to absorb debts into your mortgage, further reducing the interest rate.
I’ll be here to help you throughout 2022, no matter what the market has in store. Just reach out if you have any questions regarding a current or new loan.
Kind regards, Ben Eick
Nectar Home Loans Hunter
Regional Manager/Head Mortgage Broker